September 13, 2010
Dallas, Texas, USA
What would you do if your sole source of income dried up tomorrow?
Would you be prepared? Do you have a plan?
In the Age of Turmoil, many income sources that were considered ‘stable’ in the old system will be at risk; this includes retirement pensions, investment income, salaries and wages, and small business profits.
For example, retirees living on company pensions could easily see their monthly stipends fall due to corporate bankruptcies. And while public pensions like Social Security are unlikely to change in the short-term, this broken system will undoubtedly see massive restructuring in the next decade.
Meanwhile, many small business owners and self-employed professionals may suffer reduced revenue as market conditions and consumer priorities shift; this has already happened to many businesses in the retail and real estate sectors.
For salaried workers, we live in a rather bizarre time when corporate profits are surging, yet revenue growth is lackluster. Companies are cutting back on expenses by reducing their headcounts and squeezing every ounce of productivity out of a smaller workforce.
Millions of people are now unemployed and without a backup plan. Politicians make empty speeches about hope and better times ahead, but they offer little more than hot air and higher deficits.
The thing is, there is a way out… self-reliance is the way to survive and thrive in this Age of Turmoil that we have entered.
When you think about it, this isn’t the only tough time in history; just a few hundred years ago, new settlers in the United States, Canada, and that penal colony down under had to brave harsh terrain, hostile natives, war, disease, etc., all without the convenience of modern technology.
Their only assets were their labor, ingenuity, and whatever they could carry on their backs. Despite difficult conditions, though, these pioneers carved out a new life with their bare hands, and they didn’t rely on government handouts or incompetent central bankers to do it.
Back then, settlers were economically independent; they built their own homes, fetched their own water, and put their own food on the table.
Now, I’m not saying we should all go out and live off the land, but I think the same lessons of economic independence apply today. In fact, in keeping with the theme from the last several days, I believe that declaring economic independence is the third pillar of self-reliance.
At the end of the day, we only have ourselves to rely on, and our own livelihood and that of our families hinges on this fact. As such, it’s critical to declare economic independence by seeking alternate sources of income.
Alternate sources of income can take a variety of forms. For those with a secure job and a fair amount of investment capital tucked away, income can be derived from any number of passive assets like high yielding securities, productive land, or other income-producing real estate.
For people who are short on capital, the development and licensing of intellectual property is a great way to generate an additional source of income. If you have a creative idea that solves a problem, there are likely several potential suitors who would license the rights to your idea.
For others who enjoy the stability of a steady paycheck, it’s a smart idea to develop new skills and seek secure employment in some of the fastest growing industries in developing economies.
In China, for example, there is a hiring bonanza in retail banking. Citigroup alone is hiring 12,000 people there. Same deal with investment banking and fund management.
There are dozens of other places in the world with similar conditions, including your home country. Sure, the housing market may have slowed down, but alternative energy is a thriving industry just about anywhere.
Here’s the bottom line: even in the worst economic conditions that we have ever known, there is substantial opportunity everywhere around us. Just like in the stock market where you can make money by shorting when the market is headed south, you can make money in a down economy.
In a down economy, it’s not like all economic activity stops; unemployment may be 10%+, underemployment may be 20%+, but there is still 80% of the workforce that is getting paid and allocating their income towards purchases each and every month.
The critical difference is that their priorities have shifted. In general, people are no longer looking to spend their money on useless trinkets or expensive consumables. But they will gladly spend on the things that they actually need.
I think this is where the greatest opportunity lies for entrepreneurs and professionals– tapping in to the shift in consumer demand.
A good entrepreneur will identify an unfilled need in the marketplace– identify a problem that needs to be solved– and create value by providing a solution. Any business that can consistently provide value for its customers will prosper in any economy, good or bad.
My own advice is for adventurous entrepreneurs to consider moving to a foreign country that either has solid economic fundamentals, vast resource wealth, or will likely become a preferred destination for the coming wave of expatriation.
These locations will provide the most substantial business opportunities, both for self-employed professionals as well as for entrepreneurs.
Having created some initial wealth for myself in this way several years ago, I believe wholeheartedly in this idea… and I’m putting my money where my mouth is. In fact, I’m actually having some discussions right now to fund some young people in setting up small businesses in central Asia next year.
I’d like to do more of this through the upcoming premium service that I’ll be launching next week. In fact, I just finished an article detailing some actionable business and employment opportunities in one of my favorite countries in the world. I think you’ll really enjoy it.
I would love to give away another free 12-month subscription to this premium service, so let’s keep the comments going today– tell me how you plan on declaring economic independence, or how you already did it.